Provincial Budget Outcome of Conditional Grants and CAPEX As at 30 September 2006

1
Provincial Budget Outcome of Conditional Grants
and CAPEX As at 30 September 2006

• Select Committee on Finance
• Presentation by
• Northern Cape
• Provincial Treasury
• 20 November 2006

2
Objectives

• To brief the Select Committee on Finance on the
  CAPEX and Conditional Grants Outcomes as at 30
  September 2006
• Summary of total CAPEX
• Summary of Infrastructure Infrastructure
  Reporting Model (IRM)
• Conditional Grants
• Reasons for under/ over expenditure per
  Department

3
Broad Overview

• Total expenditure on Payments for Capital Assets
  amount to R198,5 million or 42 of the allocated
  budget as at 30 September 2006.
• The Province projects to over-spend its CAPEX by
  R83,9 million or 18 of the budget.
• Total expenditure on conditional grants amount to
  R338,2 million or 37 of the allocated budget as
  at 30 September 2006.
• The Province project to overspent CG budget by
  R9,5 million.

4
Summary of Capital Expenditure per Department as
at 30 September 2006
5
Payments for Capital Assets(Capital Expenditure)

• Total Capital Expenditure as at 30 September 2006
  amount to R198,5 million or 42 of CAPEX budget.
• An improvement compared to 37 in 2005/06.
• Social Sector Capital Expenditure amount to
  R228,9 million as at 30 September 2006 or 43 of
  capital budget
• An improvement compared to 33 in 2005/06.
• Education capital expenditure amount to R11,2
  million or 44 of capital budget.
• Considerable improvement compared to 28 in
  2005/06.
• Health capital expenditure total to R114,0
  million or 42 of capital budget.
• An improvement compared to 36 in 2005/06
• Social Services Population Development capital
  spending amount to R4,2 million or 46 of capital
  budget.
• Considerable improvement compared to 27 in
  2005/06.
• Other sectors capital expenditure combined total
  to R69,0 million or 42 of capital budget.

6
Total Infrastructure (Maintenance Capital)
7
Summary spending on Infrastructure

• Allocated Budget R664,7 million
• Total Infrastructure Spending as at 30 September
  2006 is R235,7 or 35 of the infrastructure
  budget.
• The Province project to underspent its
  infrastructure budget by a net amount R45,5
  million at the end of the year.

8
Spending on Infrastructure per Department

• Education
• Allocated Budget R26,9 million
• Spending as at 30 September 2006 is R13,3 or 50
  of infrastructure the budget.
• The department projects to overspend the
  allocated budget by R20,459 million.
• The reason, according to the department is due to
  reprioritisation Capital budget of the
  department has been reduced to augment
  compensation of employees.

9
Spending on Infrastructure per Department cont.

• Transport, Roads and Public Works,
• Allocated Budget R246 million, of which R115,4
  million represent PIG.
• Spending as at 30 September 2006 is R85,7 million
  or 35 of the budget.
• This is below average.
• The reasons for slow spending, according to the
  department, is the delay on the implementation of
  projects.
• However, the department projects to break even at
  year end

10
Spending on Infrastructure per Department cont

• Health
• Allocated Budget R325,6 million, of which R12,0
  million represent PIG.
• Spending as at 30 September 2006 is R96,5 million
  or 30 of the budget.
• The reason for slow spending is as stated by the
  department attributed to delays in major
  projects.
• The department is projecting to under-spend its
  infrastructure budget by R84, 2 million.

11
Spending on Infrastructure per Department cont.

• Agriculture and Land Reform
• Allocated Budget R30,7 million, of which R2,7
  million represent PIG.
• Spending as at 30 September 2006 is R11,5 million
  or 37 of the budget.
• Slow spending, according to department, is delays
  in tendering processes by Public Works.
• However the Department is projecting to break
  even at year end.
• Sport, Arts and Culture
• Allocated Budget R10 million
• Spending as at 30 September 2006 is R15,9million
  or 159 of the budget
• The Department is projects to overspend by R18, 3
  million by the end of the financial year.
• The project was initially allocated R40 million
  over the four year period.
• Due to slow spending during previous years
  amounts were not rolled over.
• The amounts had been reallocated during
  adjustment estimates.

12
Spending on Infrastructure per Department cont.

• Housing Local Government
• Allocated Budget R25,3 million, of which 88
  represent the eradication of bucket system.
• Spending as at 30 September 2006 is R11,5 million
  or 50 of the budget.
• Sport, Arts and Culture
• Allocated Budget R10 million
• Spending as at 30 September 2006 is R15,9million
  or 159 of the budget
• The Department is projects to overspend by R18, 3
  million by the end of the financial year.
• The project was initially allocated R40 million
  over the four year period.
• Due to slow spending during previous years
  amounts were not rolled over.
• The amounts had been reallocated during
  adjustment estimates.

13
Challenges Main causes of Infrastructure
Underspending

• Project lists not submitted timeously to the
  Implementing Agent (IA)
• IA cannot start with planning and design of next
  financial years projects
• Contractors will not be on site on 1 April of
  each year lead to rollovers
• Lack of forward planning and poor alignment of
  planning and budgeting cycle.
• Inadequate assessment of infrastructure plans and
  budgets by departments.
• Budgets for large multi year projects are
  committed to one financial year.
• Lack of ownership/ leadership by HODs.
• Lack of Programme Management Skills in
  departments.

14
Solutions

• Full implementation of Infrastructure Delivery
  Improvement Programme (IDIP).
• Building of Capacity in line departments.

15

• Conditional Grants

16
Conditional Grants by Grant Type
17
CONDITIONAL GRANTS 2nd QUARTER EXPENDITURE
COMPARISON (2005/06 VS 2006/07 FINANCIAL YEAR)
18
Aggregate Expenditure of CG as at 30 September
2006

• Total budget R915,6 million
• Total transfers received R401,1 million
• Expenditure to date R338,163 million
• 84 of total received funds
• 37 of budget
• A considerable decline compared to 55 in 2005/06

19
Detail on Conditional Grant per Department
20
Department of Agriculture

• Agriculture Grants
• Comprehensive Agriculture Support (CASP)
• Land Care Programme
• Budget Outcome 2nd Quarter
• Total National Allocation R21, 6 million
• Total transfers received R9,704 million
• Total spent as at 30 September 2006 R11, 7
  million
• 54 of the budget.
• CASP National Allocation R15, 8 million
• Total transfers received R7,1 million
• Total spent as at 30 September 2006 R9, 1
  million
• 58 of the budget
• Considerable improvement compared to 29 in
  2005/06.

21
Department of Agriculture cont.

• Budget Outcome
• Land Care Programme National Allocation R5, 8
  million
• Total transfers received R2,6 million
• Expenditure as at 30 September 2006 R2, 6
  million
• 100 of the total received.
• 46 of the Budget.

22
Department of Education

• Education Grants
• Further Education and Training College Sector
  Recap
• HIV and Aids (Life skills Education)
• National School Nutrition Programme
• Budget Outcome 2nd Quarter
• National Allocation R42,1 million
• Total transfers received R21,0 million
• Spending as at 30 September 2006 R22, 8 million
• 108 of total transfers received
• 54 of National Allocation.
• An improvement compared to 50 in 2005/06.
• FET National Allocation R10, 0 million
• Total transfers received R5,0 million
• Total spent as at 30 September 2006 R0, 0
  million
• Nothing was spent to date

23
Department of Education cont.

• HIV AIDS National Allocation R2,4 million
• Total transfer received R1,2 million
• Total spent as at 30 September 2006 R0, 584
  million
• 48 of total transfers received
• 24 of the Budget
• A declined compared to 36 2005/06.
• National School Nutrition Programme National
  Allocation R29, 6 million
• Total transfers received R14,8 million
• Total spent as at 30 September 2006 R22, 2
  million
• 150 of total transfers received
• 75 of the Budget.
• A considerable increase compared to 50 2005/06

24
Department of Education cont.

• Reasons for below average spending as indicated
  by the department
• HIV AIDS
• The slow spending, according to the department
  is attributed to change in the business plan. (No
  indication on detail of changes)
• FET
• Transfers to FET institutions were transacted to
  suspense account, hence no expenditure reported.
• The discrepancy has since been corrected.

25
Department of Health

• Health Grants
• Comprehensive HIV AIDS
• Forensic Pathology Services
• Health Professions Training and Development
• Hospital Revitalisation
• National Tertiary Services

26
Department of Health cont.

• Budget Outcome 2nd Quarter
• National Allocation R539, 2 million
• Spending as at 30 September 2006 R191, 4
  million
• Total transfers received R269,6 million
• 71 of total transfers received
• 36 of Budget, a decline compared to 46 in
  September 2005
• Comprehensive HIV AIDS National Allocation
  R68,6 million
• Total transfers received R34,3 million
• Expenditure as at 30 September 2006 R28, 9
  million
• 84 of total transfers received
• 42 of the Budget.
• an improvement compared to 27 in 2005/06.

27
Department of Health Cont.

• Forensic Pathology Service National Allocation
  R23, 6 million
• Total transfers received R11,8 million
• Expenditure as at 30 September 2006 R2,2
  million
• 18 of total transfers received
• 9 of the Budget
• Health Professions Training Development
  National Allocation R41,1 million
• Total transfers received R20,5 million
• Expenditure as at 30 September 2006 R20,5
  million
• 50 of the Budget, which is the same as in
  2005/06.

28
Department of Health Cont.

• Hospital Revitilisation National Allocation
  R313,6 million
• Total transfers received R156,8 million
• Expenditure as at 30 September 2006 R93, 7
  million
• 60 of total transfers received
• 30 of the Budget,
• A considerable decline compared to 52 in 2005/06
• National Tertiary Services National Allocation
  R92,3 million
• Total transfers received R46,1 million
• Expenditure as at 30 September 2006 R46,1
  million
• 100 of total transfers received
• 50 of the Budget which is the same as in
  2005/06.

29
Department of Health Cont.

• Reasons for slow spending
• Comprehensive HIV AIDS
• According to the department the reason for the
  slow spending is attributed to
• Delay in the start of ARV clinic renovations
• Challenges in the recruitment of professionals.

30
Department of Health Cont.

• Forensic Pathology Services Grant
• Slower spending, according to the department, is
  attributed to
• Personnel costs journalized late to the grant.
• Delivery of equipment mortuary vehicles.
• Delays in appointment of contractors for
  renovations in existing mortuaries.

31
Department of Health Cont.

• Hospital Revitilisation
• Slow spending, according to the department is
  attributed to
• The delay in the appointment of contractors due
  to delayed procurement processes,
• The capacity to deliver by some of the
  contractors appointed on the job,
• The shortage of skills because of the current
  demand in the construction sector, and
• The shortage of materials particularly breaks and
  cement.

32
Department of Housing Local Government

• Housing LG Grants
• Integrated Housing and Human Settlement
  Development
• Budget Outcome 2nd Quarter
• National Allocation R104,7 million
• Total transfers received R46,1 million
• Spending as at 30 September 2006 R41,5 million
• 62 of total transfers received
• 40 of the Budget.
• A considerable decline compared to 79 in 2005/06

33
Department of Housing Local Government

• Reasons for slow spending
• Integrated Housing and Human Settlement
  Development
• The slow spending, according to the department,
  is attributed to non-performance by a number of
  contractors.
• Legal process to terminate contracts of the
  affected contractors.

34
Department of Sport, Arts and Culture

• Budget Outcome 2nd Quarter
• Mass Sport and Recreation Participation
  Programme National Allocation R6,2 million
• Total transfers received R3,5 million
• Expenditure as at 30 September 2006 R1, 8
  million
• 52 of total transfers received
• 30 of the Budget,
• A decline compared to 43 in 2005/06
• the low spending, according to the department, is
  attributed to the delay on the appointment of
  coordinators.

35
THANK YOU